HPQ Update: breakdown on track.

Here is my previous post on HPQ that showed the big picture but here is the post that you should really look at (more detailed) to see how my current model is playing out.  In short, that second link showed that a rising wedge had formed, thrown itself over and was now threatening to break back down into the channel of the wedge.

Fast forward to today.  While the DJIA put in a record top today, this was not confirmed by HPQ shares (and other shares as well as other indices).  In fact, HPQ shares have not only broken down the top rail, they found support at exactly the lower rail and bounced with the rest of the markets not to a new high, but into wave 2 up.  This is very typical wedge breakdown behavior.

As you can see from the zoomed in chart below, the 5 red waves down kissed the lower channel and then bounced because wave 1 is very unlikely to have the power to break down a major support level like that.  That line has been support since Oct 2013.  The most common thing to do is to bounce up in an a-b-c into wave 2 and then use the power of the 3rd wave to smash the support level with gusto.

The crazy spike in the markets today (90 point "flash crash" from 17180 down to 17090 in a matter of 2 minutes) caused a blip on the HPQ chart that did 2 things.  First off, it told you that all of the trading is programmed.  Why should HPQ sell off just because the DJIA has a flash crash? Don't HPQ shares have some kind of intrinsic valuation based on Wall Street metrics like PE PS and PB?  Of course I am being sarcastic.  The Wall St valuations are just the marketing tools of the con men and they literally mean nothing.  Otherwise we could never have dot bomb type booms and busts.

Second, it added an extra pulse in the chart that likely turned the pattern that was there into a rising wedge (which would indicate a C wave according to my recent proprietary indicator).  Is it a coincidence that today's rally peaked exactly at the 38.2% fib as shown below?  I think not.  In any case my primary model has to be the red path which would suggest a small move up at the open (10-15 Dow points) and then an AM reversal with rapid selling taking hold. My alternate model is the blue path which would run the chart up to the 50% fib.  Either of these levels could be considered to be about the level of the prior 4th as shown by the red arrow.

It will be interesting to see what news item this could get attributed to even though it is being telegraphed by the EW model already.  The Scottish breakaway vote would be my top (if not a bit too obvious) guess.